Bank of America laid off 540 of its Charlotte employees Wednesday as the bank slashes its division that handles troubled mortgages. It marks the largest single big-bank layoff in the city since 2009.
The cuts amount to nearly two-thirds of the local workforce in that division, known as Legacy Asset Servicing.
At its peak in 2012, the unit employed 42,000 full-time workers across the company as the Charlotte-based bank dealt with more than a million past-due mortgages. The bank has cut a third of those jobs as it reduces the number of delinquent loans through mortgage modifications, short sales, foreclosures and wholesale loan sales.
Earlier cuts in the servicing unit have come largely in southern California, New York, Florida and the Dallas area. Charlotte had largely been spared mass layoffs in the unit until now.
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Bank of America managers spent Wednesday afternoon informing employees of the layoffs in large groups at the servicing offices in the Gateway Village on West Trade Street.
“The prevailing sentiment is: ‘Be proud of the great work that you’ve done. You’ve helped us achieve a point where we’re better today than we were,’” Bank of America’s Charlotte market president Charles Bowman told the Observer. “We’re going to continue to help everybody that’s impacted make a positive transition, whether it’s in this company or if it’s outside of this company.”
Most of the employees losing their jobs dealt directly with borrowers. About 400 workers in the servicing unit locally will keep their jobs.
Of the 540 losing their jobs Wednesday, about 150 will have the opportunity to shift to jobs supporting the consumer call center in Charlotte. The bank also currently has about 250 open positions in the city, Bowman said.
“Our hope and expectation is that these employes will end up being rehired in other parts of the bank,” Bowman said. “Those that aren’t, we’re really going to do our best to help them transition to other job opportunities in Charlotte.”
Bank of America continues to employ about 15,000 people in its headquarters city.
The layoff will trigger a formal notice to state officials who tally mass job losses. According to state records, Wednesday’s Bank of America cuts will mark the largest single-event job cut in North Carolina since February 2013, when electrical component manufacturer Te Connectivity said it would lay off 664 people in Greensboro.
It’s also the largest single job cut at a big Charlotte bank since Wells Fargo issued layoff notices to 548 workers as it absorbed Wachovia in 2009.
Bank of America created the Legacy Asset Servicing group in early 2011 to house 1.4 million mortgages more than 60 days past due, largely inherited in the 2008 acquisition of subprime lender Countrywide Financial.
CEO Brian Moynihan has made reducing the number of delinquent loans a priority in his four years in the job. As of the end of the first quarter, the number of seriously delinquent loans had fallen to 277,000. The division recorded $1.6 billion in expenses in the first quarter, down $1 billion from the year-ago quarter. Chief Financial Officer Bruce Thompson told analysts in April that the goal is to get the expenses to $1 billion by the end of the year.
Industry analysts have closely watched the bank’s expense cuts, which have played a role in Bank of America’s stock price rise over the past two years.
The Legacy Asset Servicing division had 26,400 employees across the company at the end of the quarter. Their ranks were built up, in part, by transferring workers from other areas of the bank. Bank of America has since redeployed about 6,000 workers back to other divisions.
Another 2,000 workers across the company have transitioned from Bank of America to another company at the same compensation level, the bank said. In one case, Urban Lending Solutions brought on about 400 Bank of America employees.
In another instance, Bank of America brought in representatives from Citigroup to interview workers losing their jobs.
Other banks have also reduced staff in delinquent mortgage servicing divisions as the economy has improved.
Last year, Citigroup laid off 150 workers in Fort Mill who worked in mortgage loss mitigation. JPMorgan Chase has taken similar actions in other parts of the country.
Bank of America’s nationwide job cuts in the default servicing unit follow two other major staff reductions at the bank in recent years.
In 2011, Bank of America announced it would shed more than 30,000 jobs as part of a companywide cost-cutting program known as Project New BAC. Those cuts, a core piece of Moynihan’s strategy to simplify the company, have fallen hard on back-office and technology workers. The bank has not said how many of those cuts have come in Charlotte.
Last year, Bank of America joined other major banks in laying off thousands of workers who process mortgage applications as slowly rising interest rates stemmed the tide of refinancings that marked 2012.